Public Service Commission Issues Two Orders in Furtherance of Renewable Energy Growth
On May 14, 2020 the New York State Public Service Commission (PSC) issued two orders designed to further State goals of rapidly expanding renewable energy development. One, issued in Case No. 20-E-0197, is a preliminary order directing utilities and the Department of Public Service (DPS) to lay the transmission and distribution planning groundwork for achieving renewables goals. The second, issued in Case No. 19-E-0735, expands and extends the NY-Sun initiative generally in accordance with a New York State Energy Research and Development Authority (NYSERDA) petition, authorizing the use of existing uncommitted funding and contemplating future funding to incentivize solar projects and achieve greater equity in the distribution of solar energy.
Order on Transmission Planning Pursuant to the Accelerated Renewable Energy Growth and Community Benefit Act
The New York State Climate Leadership and Community Protection Act (CLCPA) sets targets for reducing greenhouse gas (GHG) emissions and developing renewable electric generation. The Accelerated Renewable Energy Growth and Community Benefit Act (AREGCBA) was passed to restructure and repurpose New York’s electric transmission and distribution infrastructure to enable New York to meet CLCPA targets. The AREGCBA includes provisions directing the PSC to develop plans for investments in the electric grid.
Pursuant to the AREGCBA, the May 14, 2020 PSC Order on Transmission Planning (Planning Order) directs electric utilities to identify distribution and local transmission upgrades that may be necessary to achieve CLCPA targets. Utilities must provide preliminary results by August 1, 2020 and final results (including a list of potential upgrades) by November 1, 2020. The Planning Order directs utilities to consider:
- Transmission systems of individual service territories (to identify capacity “headroom”)
- Existing constraints/bottlenecks that limit energy deliverability
- Synergies with traditional capital expenditure projects
- Least cost upgrade projects to increase capacity of the existing system
- New or emerging solutions that can complement traditional upgrades
- New projects which would increase capacity
- Fossil fuel generation retirements
The Planning Order also requests that utilities develop proposals for the utility planning process that will guide future investments, specifically how to support CLCPA goals and allocate costs in the context of other capital expenditures and utility plans.
The Planning Order provides guidance to utilities on possible models for cost recovery and cost allocation, and asks utilities to file proposals on these topics by October 5, 2020. The guidance advises utilities to consider whether costs for “business as usual” projects that would simultaneously provide support for renewables (or that could be modified to support renewables) should be recovered from ratepayers and under what cost allocation methodology. The planning process may identify upgrades that would not be built according to traditional investment criteria, but that address a specific need for CLCPA goals. No method for recovering these costs exists, so utilities should propose funding solutions.
The AREGCBA requires the PSC to develop and implement a plan for upgrades to the bulk power system. Studies are underway to identify system upgrades, and the PSC will initiate a second proceeding to establish decisional criteria for planning and investments.
The May 14, 2020 Order regarding the NY-Sun initiative (NY-Sun Order) grants NYSERDA’s requests to: (a) increase the NY-Sun target to 6 gigawatts (GW) of distributed solar energy; (b) extend the NY-Sun program term to 2025; and (c) increase NY-Sun funding by $573 million. It orders NYSERDA to file an updated NY-Sun Operating Plan reflecting this program expansion by June 1, 2020. The NY-Sun Order also adopts NYSERDA’s proposed Framework for Solar Energy Equity to expand the availability of solar energy in low and moderate income and environmental justice communities. Finally, the Order expands the availability of remote net metering beyond single-customer owned projects.
In January 2016, the PSC through its Clean Energy Fund Order (CEF Order) consolidated all post-2015 NYSERDA clean energy activities and ratepayer funding under the Clean Energy Fund. The NY-Sun initiative, a 3 GW distributed solar goal, and post-2015 funding elements were included as part of the Clean Energy Fund. The CEF Order established utility collections from ratepayers to support a $960.6 million funding requirement.
The NY-Sun program, administered by NYSERDA, is approaching achievement of the original NY-Sun goal of 3 GW of distributed solar to be installed by 2023. In 2019, Governor Cuomo announced an expanded NY-Sun goal of 6 GW by 2025 as part of a plan for 100% carbon-free electricity in his 2019 State of the State Address. The CLCPA codifies New York’s ambitious clean energy goals, including the target for 6 GW of distributed solar by 2025. On November 25, 2019, NYSERDA filed a Petition Requesting Additional NY-Sun Program Funding of $573 million and Extension of Program Through 2025 (the Petition).
In the NY-Sun Order, the PSC directed that initial funding be sourced from existing uncommitted NYSERDA funds originally collected for the development of large-scale renewable generation. NYSERDA may now commit and spend as much as two-fifths of the total expanded NY-Sun authorization, or $230 million, of those uncommitted funds as part of NY-Sun. The PSC will consider the appropriate source of funding for the following period as part of its review of the Clean Energy Fund.
The NY-Sun Order provides for a Community Adder incentive for community distributed generation (CDG) projects in service territories where the Market Transition Credit (MTC) and Community Credit incentives funded by utilities have been exhausted. It is an up-front incentive, paid by NYSERDA. The Community Adder was previously established in the territories of Orange & Rockland Utilities and Central Hudson. It will now be extended to all other territories except for those of Consolidated Edison of NY and the Long Island Power Authority, as the PSC deemed additional incentives for CDG in these territories unwarranted. NYSERDA proposed a uniform level of $0.18/Watt DC for the adder. The PSC, however, directed NYSERDA to establish the new Community Adder in two or more segments, with the rate declining in each segment. The first rate should be available to projects that qualified prior to the issuance of the Order that are otherwise eligible for the Community Adder, as well as projects that qualify for an initial period following the Order. The first rate is to be set at a higher level than the proposed $0.18/Watt DC. The later rates may be at $0.18/Watt DC or a lower level. NYSERDA is directed to include the level of and qualification for each rate in its filing of the NY-Sun Operating Plan.
The CLCPA includes a requirement that disadvantaged communities receive at least thirty-five percent of the benefits of clean energy programs. The identification of disadvantaged communities will be performed by the Climate Justice Working Group, which has yet to do so. NYSERDA proposed $135 million in incremental funding for additional incentives for projects benefiting low and moderate income (LMI) customers, affordable housing, and environmental justice and disadvantaged communities as well as at least $65 million of MW Block and Community Adder incentives supporting the projects that receive those additional incentives. NYSERDA also proposed a Framework for Solar Energy Equity. Major components of the Framework include: (1) continued support of community organizations, local governments, housing providers, and other entities to advance solar initiatives; (2) continued support for a no-cost (or guaranteed savings) community solar option for LMI households; (3) new targeted intervention and support to make the community solar market more broadly accessible; (4) incentive adders for rooftop projects sited on regulated affordable housing properties and to LMI homeowners; (5) incentive adders for projects that pair solar and energy storage and provide resiliency or financial benefits to LMI customers and affordable housing; and (6) incentive adders and technical support to solar deployments that can support the reduction of local pollutants from fossil fuel peaking units. In executing the Framework for Solar Energy Equity, the NY-Sun order directs NYSERDA to work closely with interested stakeholders to maximize its reach and effectiveness, and to detail plans for reporting on metrics related to equity, as required by the CLCPA, in NYSERDA’s reports to the Commission on the NY-Sun program.
The order also supports NYSERDA’s inclusion of added incentives for projects that offer additional benefits to the achievement of State policies and objectives, including projects sited on a brownfield or landfill and projects utilizing a parking or rooftop canopy design, and for co-location of agriculture and solar.
Finally, the NY-Sun Order relaxes some restrictions on remote net metering beyond the previous applicability to only a single customer owning or leasing a project site. To avoid the use of remote net metering where CDG would be more appropriate, each project shall be limited to serving ten total customers, though each customer may have multiple accounts, and only nonresidential customers and farm residential customers will be permitted to participate, consistent with current rules.